November 7, 2022 · Chad Anderson
The corporate buyer is back – the industry responds to new levels of demand
At Jetcraft, our client base tends to be evenly split between Ultra High Net Worth Individuals (UHNWIs) and buyers of corporate fleets.
Naturally, during the pandemic, the level of activity from corporate buyers significantly tailed off, with many businesses establishing policies advising against travel.
The good news for our industry is that, with the world once again open for business, corporate travel is increasing, and companies are looking to renew their fleets as they restart their travel planning.
These are market developments that reflect our own optimistic outlook in our recent 5-Year Pre-Owned Business Jet Market Forecast.
Rising to the challenge
Corporate fleet planning, in which businesses begin evaluating opportunities to update their aircraft, typically takes place months in advance of aircraft replacement, meaning a dialogue should be constantly ongoing between aircraft suppliers and buyers.
With these conversations dropping off due to the pandemic, as well as some corporates selling aircraft fleets completely during 2020, there is added pressure on flight departments to act quickly in order to fulfil travel needs.
UHNWI interest in business aviation is still extremely high and aircraft inventory remains relatively low. This makes it even more important for corporate fleet planners to work with the right company to source fleet replacements and manage their transactions.
Additionally, in the US, the end of this year will mark the closing of 100% bonus depreciation – which allows a business to write off the total cost of their investment into an eligible asset from their taxable profits, as opposed to writing the value off over the ‘useful life’ of the asset. With 100% bonus depreciation facing an intended ladder step down of 20% each year beginning in 2023 – before it ends completely in 2027 – now is a particularly financially attractive time for US corporates to buy – adding to the pressure of aircraft sourcing.
For corporate buyers who can take a longer-term view, the strength of the dollar against other currencies means we will see more pre-owned aircraft come to the market as European and Asian owners look to sell – with aircraft trading in dollars, international sellers converting the proceeds of their sale into weaker currencies will benefit from exchange rate gains.
As Ever Forward, our 5-Year Pre-Owned Business Jet Market Forecast, shows, transaction volumes will see steady growth through 2026, with more than 2,000 transactions forecast per year.
Ultimately, strong demand across the globe from different customer and aircraft types mean the overall health of the market is sustainable and predictable. This has translated into strong performance for many manufacturers, which are currently enjoying healthy order books bolstered by large corporates’ increasingly advanced planning.
Our industry remains in demand, so corporate buyers that need to replace aircraft shouldn’t delay. To find out more about how we can assist you, please contact your nearest Jetcraft sales representative to discuss your options.
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